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21 Νοε 2013 (πριν από 3 χρόνια και 10 μήνες)

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State of the Electricity

Utility Industry

David K. Owens

Executive Vice President

Edison Electric Institute


Annual Fuel Oil/Energy Buyers Conference

October 27, 2009

America’s Challenges


Resolve financial crisis



Stimulate economy and get America back to work



Address Climate Change



Transform our society to be greener and more efficient



A Significant Transformation is Underway
Stimulated by ……….


Restructured Financial Market



Major Initiatives to Address Climate Change



Emerging Technologies



Gaps / Lack of Clarity in Federal / State Decisions on
Infrastructure and Market Issues

Financial Crisis Impacts …

Access to Capital

Short
-
term lines of credit for small business

Long
-
term investments



Ultimately Impacting

Small Business, Consumers, and Reliability

Overview


Recession has dampened demand, but forecasted to rebound and
grow


Commodity, equipment, and labor costs are down, making it an ideal time to
build and prepare for future demand increases



Wall Street Restructuring affects access to capital markets and
increasing cost of capital


As one of the most capital
-
intensive industries, reduced access to capital
markets at higher costs, means that enhanced liquidity and financial flexibility is
important



Utility industry at the beginning of a major investment cycle


Driven by new technology, demand growth, efficiency and environmental CAPEX



Addressing climate change and new priorities will be costly



Industry Capital Expenditures are Growing


Industry committed to reliability


-

making needed investments in
generation, transmission, smart grid/


distribution & the environment



Financial crisis initially brought sharp
revisions for 2009



Multi
-
year trend of soaring construction
/materials costs reversed in Q3 2008



Increased spending expected to continue
into the future


Total CAPEX for 2010
-
2030 ~ $1.5 trillion*


Excludes impact from climate legislation


U.S. Shareholder
-
Owned Electric Utilities

* The Brattle Group,
preliminary findings from The Edison Foundation presentation
titled Transforming America’s Power Industry. Represents the entire Power sector.

Request Mark Agnew to Update this Slide

10/13/09

Industry Faces Difficult Decisions

Defer or cancel
infrastructure
projects to
enhance current
liquidity position

Electric reliability
could be impacted
when economy
and demand
rebound

To Invest or Not to Invest?

Opportunities
with sharply
declining
commodity and
input costs

Higher financing
costs

Uncertainty ?

View Forward

President Obama’s

Energy / Environmental Views

Climate Change

Energy

Efficiency

Smart Grid

Renewable Portfolio

Standards

25% by 2025

Overhaul of

Federal Efficiency Codes

Increased Government Support

80% reduction by 2050

H.R. 2454 83% reduction by 2050

H.R. 2454 20% by 2020

In H.R. 2454

In H.R. 2454 and stimulus
package

Climate Change Questions


We Must Answer!


How do you minimize the impact of compliance
costs on
low
-
income consumers?



What must U.S. climate change legislation and carbon
management strategy include to



Ensure economic growth?



Ensure energy security?



Avoid unfairness?


Key Climate Provisions


Economy Wide?


Cap
-
and
-
Trade or Tax?


Mitigating Customer Impacts?


Allowances


Offsets


Strategic allowance reserve


Other approaches


Targets and Timetables
?

Targets and Timetables

Questions / Concerns




To meet short
-
term targets


Power sector will rely on energy efficiency, renewables and
natural gas







In the medium term (
i.e.
, 2020
-
2025)


Targets should be harmonized with the development and
commercial deployment of advanced climate technologies
and measure
s


(
e.g.
, nuclear energy, advanced coal technologies with carbon
capture and storage, PHEVs, smart grid)


The American Clean Energy and Security Act of
2009 (H.R. 2454)

Economic Impact Projections

Allocation of Allowances

Primary Goals


Help mitigate the impact of increased energy prices on
consumers



Assist in transition to clean energy economy



Advance development and deployment of clean energy
technologies, including energy efficiency

15

0
1000
2000
3000
4000
5000
6000
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
Allowance Distribution Schedule 2012
-

2050

Electricity LDCs
Small LDCs
Long
-
term Contract
Generators

Merchant Coal
Petroleum & Natural Gas
Consumers
Domestic Energy Technology
Industrial Energy Sector
General Purpose Auctions
International Programs
Reds = Energy
Producers & Consumers

Yellow = Domestic
& International Energy Programs

Blues =
Auctions

Allowances Under Kerry
-
Boxer Bill (S.1733)
Clean Energy Jobs and American Power Act

S.1733:


Does not specify how many allowances each covered
industry would receive


Contains the same allocation distribution as H.R. 2454


Total number of allowances for 2012
-
2016 are the same
under H.R. 2454


Auctions 25% of the allowances (15% in H.R. 2454). Source
of these additional allowances is unclear


Establishes a minimum auction price of $10 in 2012,
escalating at 5% per year plus inflation


Contains a so
-
called “soft” price collar

What Will It Take to Address Climate
Change?


Renewables



Energy efficiency



Clean coal technologies



Carbon capture and storage



Nuclear



Plug
-
in hybrid electric vehicles (Smart
grid)

We need it all … but it will be costly!

There is no silver bullet!

The Enhanced Role for
Renewabl
es

Renewable / Energy Efficiency
Questions


We Must Answer!


Renewable Techno
logy



How much can increased
renewable capacity contribute
going
forward?



How do we get
transmission constructed for renewables
?





Energy Efficiency



How significant of a
role

can
energy efficiency play in the future
?



How can customers benefit
and actively participate in energy
efficiency programs from the residential and commercial
perspectives?


State Renewable Energy

Portfolio Standards



31 states with quota obligations


RPS



Each state has different natural resource endowment,
different industrial and socio
-
economic
characteristics…



…So each state RPS has:


Different targets


Different timelines


Different eligible resources


Different compliance entities


Different compliance mechanisms


Different enforcement and penalties


Federal Policies

A Federal ERES?


H.R. 2454


The American Clean Energy and Security Act of 2009



S.1462


The American Clean Energy and Leadership Act
of 2009



Contingent on climate (HR 2454 / S.1733)

Planned
Capacity Additions Reflect
State
RPS
Requirements

Non
-
hydro renewables make up 4% of US capacity today
but 34% of planned capacity additions through 2020.


US Generation Capacity in 2008

(1,061 GW in Service)

Planned Capacity Additions to 2020

(352 GW)

Source; Ventyx Global Energy and Bernstein Analysis

Hydro

9%

Gas

41%

Coal

30%

Nuclear

10%

Oil

6%

Non
-
Hydro

Renewable

4%

Hydro

16%

Gas

23%

Coal

14%

Nuclear

13%

Oil

0%

Non
-
Hydro

Renewable

34%

Source: Bernstein Research

Biggest Challenge for Renewables …
Transmission


Planning



Siting



Cost Allocation


Renewables are Variable Resources!

Integrating Renewables

Operational Challenges


Higher RPS levels can create significant surplus energy


Has created excess energy at night



Requires more system backup to maintain reliability


Quick start and fast ramping technologies (peaking / storage) to
manage generation variability and maintain reliability when wind falls
off or clouds appear



Smart grid can help mitigate some of these problems


Energy storage / off
-
peak electric vehicle charging can mitigate
problem


Smart grid will help enable these new technologies




The New Role for Energy Efficiency

Demand Projected To

Increase 40% 21% by 2030

Sources: U.S. Department of Energy, Energy Information Administration

0
1,000
2,000
3,000
4,000
5,000
6,000
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Billon kiloWatthours

Recession

Impact?

The Energy Efficiency Challenge


Average US household owns 24 consumer electronic
products


2 DVRs use as much energy in 1 year as a refrigerator


Play Station and X
-
Box use more electricity than a PC


PCs and TVs now account for 10% of a home’s electricity usage


99% of these products must be plugged in or recharged


42” Plasma TV uses more than twice as much as a standard 27” TV



More efficient use of energy could significantly reduce
energy bills



Need to educate
all

consumers about how to save energy
and use it more efficiently




Aggressive campaign for technologies


Smart buildings


Smart appliances


Smart electric meters and grid


Smart rates



Use of “smart technologies” and new rate designs can:


Allow consumers to control their energy usage to save money


Avoid wasting energy


Control how and when appliances do their jobs


Help utilities efficiently operate their systems and maintain reliability


Help keep supply and demand in balance


Support more efficient use of generating resources









Commercializing plug
-
in hybrid electric vehicles


Intensified National Commitment To

Energy Efficiency Is Needed

Energy Efficiency
-

Our 1
st

fuel

Ave. Cost
~$0.035 / kWh Saved

Source: The Edison Foundation


Institute of Electric Efficiency;

EIA Form 861

$
0.000

$0.005

$0.010

$0.015

$0.020

$0.025

$0.030

$0.035

$0.040

$0.045

$0.050

2000

2001

2002

2003

2004

2005

2006

2007

$/kWh

Total Utility EE Costs per kWh Saved

Energy Efficiency Business Model
Components

Program Cost
Recovery

Lost Margin
Recovery

Performance
Incentives

Coal Must Remain in the Mix…

Carbon Capture and Storage Challenges


Capture


Develop cost
-
effective means of capturing CO
2

from combustion


Transport


Ability to access current gas and CO
2

pipeline structure


Regulatory framework


Liability concerns


Storage


Permitting and siting


Liability concerns


Full
-
scale demonstration projects


Public education and acceptance

New Coal Generation

Carbon Capture and Storage (CCS) in (H.R. 2454)


“National strategy” for a CCS regulatory framework


Federal agencies to develop a (sec. 111)








Geologic storage and propose regulations



EPA to finalize regulations for under the Clean Air Act (sec. 112)



Study of legal framework for geologic storage sites


Establish task force (sec. 113)







New Carbon Storage Research Corporation


Funded by charge on deliveries of fossil fuel electricity


Fund commercial
-
scale (>250MW), integrated demo projects (sec. 114)


$10 billion over 10 years; 50% of funds reserved for utility projects


Corporation is an affiliate of EPRI and not an agent of the U.S. government



…And So Should Nuclear

U.S. Electricity Sources Which Do Not
Emit Greenhouse Gases During Operation
2008

Source: Energy Information Administration

Updated: 4/09

Expectations for the Future

2010

2012

2014

2016

2020

2018

Suppliers ramp up
component manufacturing
capability

Second wave begins construction
when it is clear that first wave can be
licensed and built on time and within
budget


Initial wave has 4
-

8 plants on line

by 2015
-
2016


Second wave begins
COL preparation

Source: NEI


U.S. Shale


A Game Changer?

Gas Production Potential

BCFD

Source: Tristone Capital, Devon Energy

Historical

Forecast

SMART GRID

A Game Changing Technology

What is the Smart Grid?


An advanced, telecommunication / electric grid with
sensors and
smart devices linking all aspects of the grid
, from generator to
consumer, and
delivering enhanced operational capabilities
that :



1.
Provide
CONSUMERS
with
the information and tools
necessary


to

be
responsive
to electricity grid conditions (including price and reliability)
through the use of

electric devices and new services (from smart
thermostats to PHEV)


2.
Ensure
EFFICENT

use of the electric grid (
optimizing current assets
while
integrating emerging technologies
such as renewables and
storage devices)


3.
Enhance
RELIABILITY

(
protecting the grid

from cyber and natural
attacks,
increasing power quality
and promoting early detection and
self correcting grid “
self
-
healing
”)

Smart meter platform and home area
network technologies will take EE and DR to
new levels

HAN communication

SmartMeter

communication


Giving customers the
tools and the know
-
how to
be smarter energy
consumers

The Changing Regulatory
Environment


Emerging New FERC Focus

“Going Green”
-

Environment / Climate Platform



Regulation of Carbon Markets


Clarify jurisdiction boundaries


FERC, CFTC, SEC


Expand regulatory goals



Regulation of Combined Efficiency and Renewable Electricity
Standard (CERES
)


Oversee Energy Efficiency Credit System


Prescribe standards and protocols for defining and measuring electricity savings


Specify types of Energy Efficiency measures


Receive and evaluate all state applications for eligible electricity savings



Smart Grid Investment and Cost Recovery



Distributed Energy Resources


How do these areas fit together?

How do they impact FERC / State relationships?


Evolving Areas of

Federal / State Collaboration

Transmission
Siting

Smart Grid

Cyber Security

Carbon

Renewables,

Energy
Efficiency,
Demand
Response


The View Forward


Respond to comprehensive energy and climate
legislation


Preserve all options


Accelerate development of technologies


Mitigate the impact of rising costs on consumers


Ensure regulatory environment supports environmental initiatives



Develop a new regulatory model which …


Stimulates new investment


Provides timely cost recovery


Equitably transforms our society to a greener and more energy
efficient economy